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The Pauperization Of Japan
Wolf Richter www.testosteronepit.com
"Pauperization,” the word, became infamous when three executives of huge consumer products companies voiced it as the new challenge in Europe. To market their products successfully, they changed their commercial strategies and applied what worked in poor countries [The “Pauperization of Europe"]. In Japan, a similar process has hounded the economy, but for much longer. And nothing shows this better than the plight of the ubiquitous but hapless “salaryman.”
He is a cultural phenomenon. He enters the formidable corporate hierarchy upon graduation and struggles within it till retirement. Most of the time, the career trajectory flattens sooner or later. Often enough the aging salaryman is shuffled aside to a “window job” where he might not even have the tools to work, such as a phone.
His life is defined by commutes in packed trains and long hours at work. After work, at restaurants and bars, the informal part of work begins with clients or coworkers to hash out inter-office issues, price differences, design problems, or product failures under the influence of alcohol—the official excuse to be direct in a culture that prizes vagueness.
In return for his labors, the salaryman hands his paycheck to his wife. She manages the household budget, pays the bills, buys what is needed, and makes investment decisions. Stories abound of the Japanese housewife who blew the couple’s life savings on leveraged investments that no one understood. And she’s known for her impeccably wrong timing [The Japanese Are Dumping Their Gold].
She also gives her husband a monthly allowance, kozukai, to buy lunch, dinner, drinks, etc., though regular visits to “soapland,” due to their higher costs, would have to be covered by special company cash bonuses. Now a lot of these structures are loosening up, and lifetime employment is no longer the ground rule, nor is marriage, but for those who end up married, especially if the wife stays at home, the allowance still applies.
In 1979, Shinsei Bank started one of the most insightful polls into consumer spending habits, or rather into male consumer spending ability—the Salaryman Pocket Money Survey. Back then, the average salaryman’s allowance was ¥47,175 ($590) per month. By 1990, the peak of the bubble when money grew on trees, wives indulged their husbands with an allowance of ¥77,725 ($971) per month. Then it crashed. By 2004, it landed on the ¥40,000 mark.
This year? ¥39,756.
And those with kids receive ¥15,000 less than those without kids.
The bursting of the Japanese bubble, now in its third decade, has ravaged salaries, bonuses, household budgets, and thus allowances—and spending. The zero-interest-rate policy that the Bank of Japan has perfected, extensive quantitative easing, and two decades of stimulus budgets that have left Japan saddled with the worst debt-to-GDP ratio in the world ... all conspired against the hapless salaryman. He works harder and longer than ever before, for less pay, and even his lunch money is getting cut.
In 1992, the average salaryman spent ¥746 ($9.32) on lunch; this year, ¥510 ($6.38). Back then, when everybody was still assuming that this was just a temporary lull in the excitement, the average salaryman took an almost leisurely 27.6 minutes to eat lunch; this year, he inhaled it in 19.6 minutes. After-work drinking took the biggest hit: in 2001, the average salaryman forked over ¥6,160 ($77) when he went out to drink. That’s a serious amount of beer. Hence the image of a midnight train stuffed with drunken and barfing guys. This year, he spent only ¥2,860 ($35) per drinking excursion.
The beer industry caught the brunt of it. Beer shipments, a closely watched index based on data from the five major brewers, dropped by 3.7% in 2011, the seventh straight year of declines. Only 442.39 million cases were shipped, the lowest EVER in recorded Japanese beer history. But this August, a miracle occurred. For the first time in years, there was an uptick in beer shipments for the month of 2.8%. Where there is beer, there is hope.
Or maybe not. Eating out got slammed. Again. In 2010, 22.6% of the salarymen said they didn’t eat out at all; in 2011, 35.8% weren’t eating out; and this year, 37.9%. If this trend keeps going, it will destroy the core of Japanese social life. (But those are the lucky ones. The number of welfare recipients set a new record: 2.115 million individuals and 1.543 million households, according to the Ministry of Health, Labor, and Welfare.)
Japanese housewives and other traders who are stuck in an old paradigm are frequently selling gold for the wrong reasons. The most egregious example is that gold often drops when the euro drops. Examining price relationships among the US dollar, the euro, and gold reveals an important pattern for investors. Read.... The Bottom Line on Gold, the Dollar, and the Euro, by Louis James.
And here is my book about Japan. It all started in France with a Japanese girl—a “funny as hell nonfiction book about wanderlust and traveling abroad,” a reader tweeted. Read the first few chapters for free.... BIG LIKE: CASCADE INTO AN ODYSSEY, at Amazon.
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This situation has not taken into account the calamity of Fukushima Daiichi NPP disaster, the ceaseless Fukushima radiation....
As posted by George here recently "Fukushima Radiation: Japan Irradiates the West Coast of North America"
Fukushima … the gift that keeps on giving.
Further, there's an investigative story by Joseph Trento at National Security News Service explaining why the Fukushima radiation problem is gonna be so severe and why there were so many secrecies and confusing stories covering the disaster.
"How Japan ended up in this nuclear nightmare is a subject the National Security News Service has been investigating since 1991. We learned that Japan had a DUAL USE nuclear program. The public program was to develop and provide unlimited energy for the country. But there was also a secret component, an undeclared nuclear weapons program that would allow Japan to amass enough nuclear material and technology to become a major nuclear power on short notice. That secret effort was hidden in a nuclear power program that by March 11, 2011– the day the earthquake and tsunami overwhelmed the Fukushima Daiichi Nuclear Plant – had amassed 70 metric tons of plutonium."
FUKUSHIMA DIARY is also a good source to keep track upon this ongoing problem
http://fukushima-diary.com/
FUKUSHIMA RADIATION should NOT be counted out in any serious discussion to grasp the Japan's underlying problems today!
...under the influence of alcohol—the official excuse to be direct in a culture that prizes vagueness.
*chuckle*
Nippon ga hatan shita baai, kokusai wa do narimasu ka?
Kotae:
??????????????????????????????
Kokusai wa seifu ga sekinin o motte sai(gu)kan itashimasu node, go anshin kudasai.
Because the country's bonds are the responsibility of the government, please proceed with caution. (Be extraordinarily careful).
Size of the purse can defer problems to an extent, but like human souls hurtling toward hell (they can't help themselves), sovereigns careen towards bankruptcy.
Passing the threshold without calling time of death, does not abrogate death.
4 has come to the global 893, due to corruption and conspiracy!
Shi. Kekkyoku Ya Ku Za, chikyu chu sonzai shiteiru, deskara Yon(4) no ukabi de tsunami no yo ni unta no tame ni kuru yo.
Clean sweep. Noah's flood beginning. So swings the mighty axeman. A seder treat. temporary booths of the froward, carried away. Downgraded, degradated.
Long sickle, hooded entity, wrathful harvest.
Welcome to global Hallowed Evenin'.
Pauperization is a world-wide phenomenon: too many humans, too many machines, no return on the use of the machines. (We love our machines, we will never let them go!)
Phantom returns (from the machines) are actual claims levied against humans (and the rest of nature). Machines 'prosper' because humans starve (and capital is wiped out). The bosses say, "No problem! There are many humans we can afford to lose some of them (as long as I get rich)."
When this system breaks down = Greece. Coming up is Spain then China and others ... into the pauperization meat grinder. Higher input costs multiply exponentially through the system ... whatever kind of system you have. In the end, nobody can afford what the system needs to function. The next step is shortages ... which are permanent.
The largest industrial input is petroleum. Regardless of production or reserves, Peak Oil occurred in 1998, when a barrel of Saudi crude cost less than $10. Price matters, nothing else. More costly crude strands all of our wasting infrastructure.
Right now, we're all wasted. Better get ready ...
When you talk to older Japanese males, they say the country is dead. The Japan they helped build is gone.
The Japanese valued lifetime employment, however that means lifetime employment at the same company. Workers don't really move around and are almost never fired. You are offered a window seat in the hopes you will quit.
The window seat phenomenon is really amazing. Most of the time you are given this "title" after you fail at something big. The Japanese never make multiple plans and test them before they are implemented. A worker comes up with a plan and he is to see it through to fruition, even if anyone with a brain could see it would never work. Failure is tested by fire. If you succeed you are praised, if you fail you are cast away. Even if you succeeded 100 times a single failure can lead to the window.
You are given an office and a desk. You may have a phone but it won't be on a company line and won't be connected to other workers. You will no longer have any power, but you may be invited to a few meetings where you can sit in the corner but will never be allowed to speak. You aren't fired and still receive your salary, but you are being constantly bombarded by your uselessness. This is to shame you into quitting, or even better to shame you into jumping off the top of the building. Your widow will receive a nice severance package.
Underneath the happy and polite coating, the Japanese are actually the biggest assholes in the world.
No No No, canadian women are the biggest assholes in the world!
Only if they are in positions of power,ugly, from atlantic canada or are young 1st gen immigrant middle eastern fatties. Still like the hot french ones.
I've been waiting for a few years for the Yen to devalue to where it should be to be competitive vs the greedback, hopefully somewhere north of 140, but things go pear-shaped if it's up in the 200 stratosphere.
Lots of assets I'd like to pick up there denominated in Yen... not the least of them are the chicas... but maybe i should say that their assets -> ass-ettes ? (hehe, I like that pun, is that an internet first?!?!).
Nothing as hot and desirable as Japanese chica ass-ettes"
Nage42, 2012
<blockquote>Japanese housewives and other traders who are stuck in an old paradigm</blockquote>
Reading this, it seems you too are stuck in an old paradigm that people have been abandoning, and was a caricature to begin with. Then again, you don't seem to have understood that too well either.
Third largest economy in the world and one of the safest places on the planet without the heavy hand of the police.
By the way, outside of Tokyo and Osaka, people don't have to ride trains to work. Somebody must be buying all those Toyotas and Hondas.
If they are getting pauperized now, what happens when the Yen falls by half?
How does the Yen stay so strong when Japan is monetizing debt like a drunken banana republic?
Strange place, Japan.
If the Yen fell by half it would immediately benefit Japan. That is why the JCB has been trying to flood the market and devalue the currency. There is very little profit to be made in foreign operations for Japanese corporations right now. They are still shipping products like mad, because if they didn't there would virtually be no profit at all. I have to buy my product from Japan. In the past six years we have lost almost 40% margin just because of the dollar's devaluation.
You can also get a much better lunch in Japan for $6 than you can in the USA.
"Japan, Inc." accumulated a lot of overseas assets during their heyday. The Yen won't collapse until they have burned through all those assets, and that will take a while.
Japan isn't saddled with a wealth destroying foreign policy and has maintained a favorable balance of trade with the outside world. Most of government debt is purchased internally .. they owe to each other hence the strength of the Yen to the USD.
Exactely, US,Europe and Japan will be pauperized in parallel...so it hurts less...
first world shrinking builds up momentum bigtime; since the print to infinity is now intercontinental.
No way out now the whole world economy is under sedatives. The more sedatives you take, the more you need them: valley of the dolls syndrome.
Valium is a rich, angsted woman's best friend. Its the sign of the times and its called greenback slime.
80% of our assets now denominated in fiat assets, the third world kings of real hard assets, like oil and metals must be laffing their heads off; when they aren't crying for their surrogate status as slaves to current system. Five years of US PAx Americana mayhem has done more to destabilise the West than the whole USSR shooting match, the Ottoman invasion of Europe and the Mongol invasion before it.
With masters like these the first world construct has only one way to go : down the toilet like toilet paper. Given their obsessive propensity to outsource to slave labour combines abroad; it makes the slide even more ominous.
Wait for the flush to work and hope the conduit does not get bottled up in fiat feces.
Cos what the politicians say today is all hot air and never blocks anything except human progress and more importantly the truth. In no way will it stop the rot.
Its downhill all the way and the first to make it there all in one piece is the happiest man of the future age.
Better have your compass on you! And a good dose of humble, down to earth logic.
Good point on - "if you are selling your gold, you are getting poorer". Never thought of it that way...
Meanwhile, our government relentlessly pumps our markets and tries to fool the world into thinking it means we're getting richer. Really it just makes poverty that much more painful for Americans. If you could wish your way to riches, everyone would be rich
"If you could wish your way to riches, everyone would be rich"
More precisely...
"The consequences of printing press money are horrendous. If you could make the world rich by having all the central banks print unlimited money, then we have been making a mistake for the last several thousand years of human history." -- David Stockman, 2012
Just revisiting the fruitful reading of following:
David Stockman economy Q&A: Economic disaster in the works (March 2012)
Stockman suggests you'd be a fool to hold anything but cash now, and maybe a few bars of gold. He thinks the Federal Reserve's efforts to ease the pain from the collapse of our "national leveraged buyout" — his term for decades of reckless, debt-fueled spending by government, families and companies — is pumping stock and bond markets to dangerous heights.
In that regard, Matrix, I think we see eye to eye. I do think the Fed is printing us into oblivion, however, I don't think we are close to Weimar yet. Or at least, we are not about to see 100% overnight inflation like people seem to be suggesting. That money that's being printed still has to work it's way through the system. And they're not printing trillions at a time, they are printing billions. In order to get to Weimar levels, I think they need to start printing trillions - like monthly - then that money will spill into assets and we will see huge asset inflation aka $100,000 ounce gold. But for now I believe the market is being pumped, artificially, and that stocks are way over priced. I also think that because stocks are overpriced, that once cash starts leaving them, they will tank. And I think gold needs to come down considerably. The 10x runnup in ten years is just too big. It's gone beyond all logic. Does that mean silver isn't a good place to have your money, no. I think silver is reasonably priced, probably even cheap. But gold, no thank you. And all this ignores the fact that there are tons of other CHEAP assets out there - beaten down stocks like AIG, REITs, Sprint, RIMM. I think property, at least in the Midwest, is incredibly cheap. I heard they were giving away property in some states. So, yes, I do think inflation lies ahead, but to me, the best way to hedge against it is in cheap hard assets, not expensive ones. And to move away from paper assets like stocks and stocks of companies which are asset poor and service heavy (Apple, anything in the insurance industry, GE, Walmart, IBM, INTC). Pretty much anything that's had a big runnup lately, I think is ill fated....
Part of the reason the salaryman has gotten so screwed is because he bought into a paradigm that turned out to be a myth: Lifetime employment. In order to grasp that ephemeral straw, he subjected himself to all the torments listed above in his twilight years.
All (I would say) Japanese youth (30s and younger) are now fully aware that they must remain mobile for their careers and have not yet been trapped in the cycle of "salaryman" as a generation (which makes it even more hellish for the original slarymen - no one to take their place at "the window). Those who have have no particular loyalties and will jump as the chance arises.
Remember, even in these hard economic times, Japan still has a higher percentage of small businesses than any other industrialised country. So not working for a souless congolmerate is still very much an option for the only vaguely ambitious (which would describe most of Japan's male youth population.)
All (I would say) Japanese youth (30s and younger) are now fully aware that they must remain mobile for their careers
____________________________________
Ah, yes, mobility, the great 'american' fantasy.
Those 'american' japanese are already mobile though as they commute long hours every day.
The great mobility 'americans' are going to get a bigger taste of is once again a new effort of colonization.
That is this kind of mobility...
Citizenism was not mentioned in the above post are you feeling ok?
He has obviously been bewitched by those evil 'americans' of his --- you know, those imaginary hobgoblins who are responsible for EVERYTHING wrong in the world.
It is true, one can be self employed or work for a small business, but it is very much a two tier econmy with small business being a precarious occupation with few benefits.
you can copy your way into 2nd place but to be first you have to take risks to innovate.
Japan lost out when Korea adopted the same strategy with cheaper labor force
Now China is copying Korea and the cycle continues
Also, Japanese managed this without natural resources like oil and without big military to raid other countries.
America would be in worse position if not for her lucky prime realestate abundant with all kinds of natural resources and seas on both sides with a lot less people.
It's robots next and the playing field is leveled for mass produced goods.
Everything will go back to the respective home countries.
And true high end will start to appear again, made by hand ridiculously expensive and awesome. A renaissance of quality.
I don't think Africa could get it together to be next labor force.
<< America would be in worse position if not for...holding the world's reserve currency. >>
Completed your thought.
+ 1
Nice observation about Korea, Aldous. We are watching our Korean bearing suppliers carefully to see if their quality/price balance holds up for us in Peru. So far, so good.
Yes, Aldous Huxleys observation is spot on and I would like add that even regions within China are falling prey to ths paradigm as one province becomes cheaper than another with disastrous results to employment as well as empty shopping malls etc.
Furthermore China now has even abandoned its toy industry due to intense wage competition from Vietnam.
This chase for cheaper and cheaper alternatives is only succeeding to create uncertainty and even more excess capacity.
Textile goes to Bangladesh.
How does Shinsei Bank start a poll in 1979? They only started in 2000...hence the Shin and the Sei.
Or was it their predecessor being referred to?
I thought soapland was the Japanese word for Quantitative Easing.
They need to move DC and get a guberment job...takes 20 min just to get a table to eat.
Wolf,
Another great article. Thanks.
I don't know if you've been here long enough to have witnessed the Japanese going from too proud to wear anything fake, to wearing obviously fake leather jackets and shoes. That and the practice of girls carrying name brand PAPER BAGS, as if they've just come from the shop... thinking nobody notices the frayed edges and wrinkles...
What else.... oh the 100Yen "Lunch" AKA white rice with some watery curry on the side.
... people living in internet cafes...
I still hand over my paycheck to my Japanesae wife. Nothing has changed.
-jb
Times are tough, most of us all over the place are getting more willing to compromise when it comes to discretionary spending, and well, other things too.
Ich bin ein Tokyite...
But women are better long term investors (in one study, their portfolios did 1% better than their male counterparts!), right? So when the non-existent future finally arrives on the 15th of never, they'll just cash out the money their salarymen brought home for them to invest, and viola! problem solved! Everybody's rich again! Oh, hurrah!
Did you catch the sarcasm? Because that's how I meant it.
Bitchez, Bitchez
(an allowance when you are married? and you have to take a knee and ask for this? Why???)
The allowance thing is just part of running the household like a business. If you live in Japan it sort of makes sense. You may be the man pulling down all the cash, but how can you stay on top of it if you are workin 50+ hours per week, plus all the commuting time, plus going out with the boss/client?
I used to work 60+ weeks, with an overseas commute and managed to save capital, drink, fuck, snort or inhale, workout and still read books.
Some men need a mommy. I still like and live by a traditional masculine role.
For low dollar value tasks like cooking and cleaning, get a part time cook, a once a week housekeeper and use your PA to do the rest. Watch that free up tons of time and you get fit in the process, no junky eating.
MATH:
90mins day cooking & cleaning kitchen X 365 = 9.1 60hour weeks or 13.7 40 hour weeks, its like a 2 month vacation or a 3 month one for a regular guy.
and you get fit, no shitty grab what you can lunch, its already done! Do your shopping online get it delivered for 10 bucks, how long does shopping take you? 1hour? how much do you make an hour? if you make more an hour get someone else to do it.
https://www.youtube.com/watch?v=y32PWF-zxqs
How can you calll Japanese shares, money in the bank, bonds and real estate ....investing?
I think all of those so called investments are nothing more than confiscation under the guise of investment. At least with pyramid schemes you are promised something whereas the Japanese are promised nothing and in the end will get nothing.
the world needs more money
.
imean, they need our money
Your comment sounds hollow. We in the U.S. have the same debt level as Japan. The only difference is the mix of Gov. Private and Commercial.
There is pauperization going on all over the world as Wolf writes. There is a different pauperization going on RIGHT NOW in Italy, selling their gold. I read about this first here at ZH (a Tyler post, a month or so ago)), here are pictures and comments about what is happening there;
http://tinyurl.com/ckffdn3
Ask how many of those paupers will trade their lives for another one in America. Zero.
In other words, Japan's been Goldman Sached. We're not far behind.
At least Mr Salaryman in Japan has a salary
Instead of just a US gov 'food stamps' Electronic Benefit Transfer card